Cash Balance Plan Life Insurance Limit Calculator

Emparion · Plan Design Tools

Life Insurance in a Cash Balance Plan: Incidental Benefit Calculator

Determine the maximum life insurance a cash balance plan can hold for a participant under the two alternative incidental benefit tests — the 100-to-1 face amount test and the individual level premium (ILP) percentage test. Only one test must be satisfied.

Participant

Current age

Plan entry age

Retirement age

Plan Formula

Annual compensation ($)

W-2 or earned income; capped at the compensation limit below.

Pay credit type

Pay credit (% of pay)

Pay credit ($ per year)

Interest crediting rate (%)

Current balance ($)

Insurance

Policy type

Whole life premium in blend ($/yr)

Remaining capacity for term/UL is shown in results (term/UL + ½ of whole life must stay under 33⅓%).

Actuarial Assumptions & Limits

ILP interest rate (%)

Pre-retirement assumption for the theoretical contribution.

Annuity purchase rate

Account ÷ APR = annual annuity at retirement.

§415(b) dollar limit ($)

2026 limit: $290,000.

Compensation limit ($)

2026 §401(a)(17): $360,000.

Cumulative Testing (Existing Policy)

Years in plan to date

Premiums paid to date ($)

The percentage test applies on a cumulative basis: aggregate premiums against aggregate theoretical contributions. Enter history to see remaining capacity.

Projected Benefit at Retirement

Hypothetical Account

—

Annual Benefit

—

Monthly Benefit

—

Test 1: 100-to-1 Ratio

Face amount may not exceed 100× the projected monthly benefit.

Maximum Face Amount

—

Projected monthly benefit—

Multiplier× 100

Test 2: ILP Premium Test

Premiums limited to a percentage of the theoretical individual level premium contribution.

Maximum Annual Premium

—

Lump sum funded at retirement—

Level funding period—

Theoretical ILP contribution—

Applicable percentage—

Cumulative Capacity

Aggregate theoretical contributions to date—

Aggregate premium capacity to date—

Premiums paid to date—

Remaining cumulative capacity—

Audit Trail

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Summary

Enter participant details to see results.

This calculator provides estimates for illustration only and does not constitute tax, legal, or actuarial advice. The individual level premium contribution shown assumes a single funding layer from plan entry age; participants with benefit formula increases may have additional layers and greater capacity. The projected benefit reflects the §415(b) dollar limit and 100% of current compensation as an approximation of the high-three-year average. Plan documents must expressly authorize life insurance and the applicable limits. Consult your plan’s enrolled actuary before implementing. © Emparion.